Case of Malaysia’s National Single Window Brief No. 04, July 2010

Brief No. 04, July 2010
Case of Malaysia’s National Single Window
SINGLE
WINDOW
A number of countries in the Asia-Pacific
region are in the process of establishing
national Single Window (SW) facilities. A Single
Window would help to simplify trade processes
and procedures and improve transparency and
predictability in international trade transactions.
This means fewer complexities, less delays and
lower costs of trade that can ultimately lead to
improved competitiveness and more trade.
UNNExT Brief series covers a range of critical issues to
be tackled in the successful development of paperless
trade and Single Window initiatives. Also, they showcase best practices in the
region to share experiences and lessons learned.
This Brief introduces Malaysia’s experience in implementing a National Single
Window for trade facilitation. Malaysia, an early adopter of paperless trade in the
region, has successfully developed a national Single Window environment. This
Brief outlines how Malaysia has evolved into the current Single Window
environment and highlights challenges, critical success factors and benefits of this
effort, which can bring valuable lessons for those countries that are in early stages
of implementing national Single Windows.
Malaysia’s Journey Towards A National Single Window For Trade Facilitation
The First Step
In the 1990s, Malaysia began to look for ways to
move away from traditional paper-based document
systems towards a more paperless information
exchange to create a paperless trade environment.
Information and Communication Technology
(ICT) was changing economic landscapes and
international trade was increasingly becoming
‘borderless’ after paperless initiatives were
incorporated into the supply chains. It was felt
that electronically-facilitated international trade
was going to become indispensable for a rapidlygrowing nation like Malaysia.
ICT was identified as a key to trade facilitation
by the Malaysian government. In the late 1990s,
it started to pioneer the use of ICT to transform
the way the nation conducted and facilitated its
paperless trade to strengthen its competitiveness.
To achieve trade efficiency and lower cost of
trade, Malaysia started to overcome non-physical
trade barriers relating to document processing,
cargo inspection at Customs, logistic bottlenecks
and unreliable freight or trade-financing services.
Bolder trade facilitation measures were implemented
to allow effective accessibility for transport service
providers, Customs and administrative operations
including regulatory requirements which were made
easily accessible, simpler and easier to understand.
By early 2000, trade facilitation was already
recognized as the engine of growth that could
offer Malaysia the path to expand its commerce
by lowering trade costs and reducing the time to
markets, resulting in significant increases in the
volume of imports and exports. At the same time,
Malaysia had also started to actively build its own
Single Window facility as recommended by UN/
CEFACT1.
Dagang Net’s Roadmap Towards A National Single
Window
In September 2009, Dagang Net was appointed
by the Government of Malaysia as the service
provider to develop, manage and operate the
National Single Window (NSW) for trade facilitation.
Dagang Net was set up in 1989 in pursuance to
a mandate tasked by the Government of Malaysia
to Malaysia’s National Chambers of Commerce and
Industry (NCCIM) to create paperless, electronic
Customs-related services to support facilitation
and streamlining of international trading processes
1
2
2
for trading communities. The Company started to
pioneer Single Window (SW) for trade facilitation
by introducing its Electronic Data Interchange (EDI)
in August 1993.
Rolling Out SMK-Dagang*Net
In 1995, the Government adopted a pragmatic
approach of identifying the successful homegrown value-added network ‘Dagang Net’ and
incorporating its globally-used EDIFACT-driven
EDI systems with the Customs Information system
operated by the Royal Malaysian Customs. Instead of
re-inventing the wheel, the Government effectively
linked both systems to roll out the newly-combined
national backbone or systems architecture in 1997
known as the ‘SMK-Dagang*Net’.
Dagang Net led this pioneering initiative with
the Royal Malaysian Customs to automate importexport declarations and clearances. The first direct
interface between both systems was actually
implemented in August 1994 for the Port Klang
Community, which included successful pioneering
efforts to commercially use e-government, digital
signatures, smartcards and electronic fund
transfers to enhance the effectiveness, efficiency
and productivity of Port Klang.
Consequently, there was a reduction of the
documentation error rate from 40% to 5% and
cost savings of almost USD29 million per year for
the Port Klang community alone (see figure 1).2
Another significant achievement for Port Klang was
the reduction of cargo turn-around time from an
average of four days to two days. In 2004, another
significant milestone was reached as the SMKDagang*Net achieved the ‘same-day cargo turnaround’.
By 2003, the SMK-Dagang*Net automated
trade facilitation at all Customs entry points in line
with Customs’ acceleration of SMK’s national rollout. The SMK-Dagang*Net also adopted openstandards based technologies in accordance with
the UN/CEFACT global standards and by 2004, it
completed the nationwide rollout. At present, SMKDagang*Net is driving the trade facilitation of the
maritime and aviation activities of Port Klang, Kuala
Lumpur International Airport, Penang’s major ports
in Butterworth and Bayan Lepas, Johor’s two major
ports and the major ports in Kota Kinabalu and
Kuching.
The combined SMK-Dagang*Net now provides
the nationwide portal to facilitate payment of duties
“Recommendation and Guidelines on Establishing a SW” developed and approved by ITPWG-TBG15 of UN/CEFACT in 2004
A Study Undertaken by Dagang Net in 1996
Figure 1: Benefits to Malaysia’s International Trade
Cargo Turnaround Time in Port Klang
4 days
2 days
1 day
50% - 75% decrease
Document Format
Document Error Rate (%) in Port Klang
40% errors
Company A
Format
5% errors
Company B
Format
Single
Standard
Document
Format
Company C
Format
87.5% decrease
RosettaNet
Format
Before PKCS
After PKCS
Future
XML format
Document Processing Time
And Resources
12 hours by
2 staffs
Before PKCS
After PKCS
IT Literacy in Port Klang Community
15 minutes by
1 clerk
95%
99%
1998
2000
75%
97% decrease in time,
50% decrease
in human resources
40%
1994
Before PKCS
After PKCS
and taxes. Currently, it handles about 275 million
electronic trade transactions and another RM 1.8
billion worth of electronic Customs duty payments
annually. The system is now available at more than
500 Customs stations located nationwide.
This SW initiative serves as an integrated gateway
to enable trade-related information and documents
to be submitted by importers and exporters,
Customs brokers, freight forwarders, shipping
agents, banks, insurance companies only once – at
single entry point. The emergence of the SW has
set Malaysia on to its next path to become a NSW
when it started to link participating permit-issuing
agencies together in 2009 to allow submission of
application and approval of import-export permits
via the Net.
Benefits Gained By Traders and the Government
Dagang Net’s community of more than 6,000
users have derived the following benefits:
•Increased access and speed to export markets
as trade transactions are now undertaken
electronically.
•Removal of red tape across Ministries and
Government agencies.
•Improved customer satisfaction via its 24/7
Careline Service, 7 Kedai EDIs (one-stop
service centres) and 19 Facilitation Points
(smaller centres) located nationwide.
•Reduced manual labour costs as labourintensive tasks can now be done via automated
electronic data system.
1996
* Based on studies made by Dagang Net in 1994,
1996, 1998 and 2000
•Less administrative work as keyed data can
now be used for different transactions and
sent to all relevant parties.
•Reduced risk of errors, increased time savings
and higher efficiency.
•Longer service hours to allow greater market
activities and greater response to market
demands.
•Speedier processing of permit applications
via the Network resulting in reduction of days
required to export.
The Government has also gained significant
benefits:
•More accurate and increased collection of
customs duty payments which has risen to RM
1.8 billion annually.
•Better compliance by trade communities as
seen in the huge increase from 40 million
electronic document transfers in 2003 to 275
million in 2009.
•Use
of
technologically-advanced
“risk
management” tools for better control and
enforcement purposes.
•Provision of necessary enforcement and
risk management tools that are on par with
international standards.
•More effective and efficient management of
resources, in particular reduction of manpower
needs and hardware costs.
3
Figure 2: Single Connectivity, Multiple Access
Banks
Insurance
Cos.
Exporters
Customs
Importers
Free Zone Authorities
Hauliers
Other Government Agencies
Warehouse operators
(bonded warehouses)
Dangerous Goods
Authorities
Landbridge operators
Port Authorities
(Dept of Civil Aviation)
Inland Port operators
Port operators
Ministry of International
Trade and Industry
Shipping Agents
Ministry of Transport
Forwarding Agents
Empty Depot Operators
Airport Ground Handlers
Freight Forwarders
Cross-Border
Partners
Core Services Offered By Dagang Net
Set up in 1989, the SMK-Dagang*Net has
spearheaded ICT-enabled linkages for Malaysian
trade communities to reach global markets:
a. Electronic Declarations (eDeclare)
Launched in 2002, this web-based application
allows importers and exporters to submit import/
export declarations to the Customs securely via the
Network. Today, it is available at all ports and entry
points in Malaysia. The average number of Customsrelated transactions conducted per month is 968,141
and the current number of users is 3,316.
b. Electronic Preferential Certificate of Origin
(ePCO)
Implemented in January 2009, this Web-based
Certificate of Origin application and approval
system enables the environment for increased
speed to markets. ePCO is implemented in the
following schemes:
•ASEAN Industrial Cooperation (AICO)
•Common Effective Preferential Tariff (CEPT)
•Free Trade Agreement (FTA)
•ASEAN-Korea Free Trade Area (AKFTA)
•ASEAN-China Free Trade Area (ACFTA)
•Malaysia-Japan
Economic
Partnership
Agreement (MJEPA)
•Malaysia-Pakistan Closer Economic Partnership
Agreement (MPCEPA)
•Generalised System of Preferences (GSP)
•Certificate of Origin for Textiles
4
3
MITI Insights - NST May 10, 2010
Malaysia3 has completed Free Trade Agreements
(FTAs) with several countries and is a key player in
ASEAN Free Trade Agreement (AFTA) today. By
using ePCO, Malaysian exporters can now efficiently
take advantage of the benefits offered through
these FTAs and Preferential Schemes.
c. Electronic Customs Duty Payment (ePayment)
ePayment is an online duty payment service
that enables preparation and submission of duty
payment to Customs.
d. Electronic Manifest (eManifest)
It allows port users to submit cargo and vessel
manifests to the respective authorities via the
Internet. It allows 674 port users to send an average
of 482,920 electronic CUSREPs, CUSCARs and
Inter Terminal Transfer Document (ITT) each month
directly to respective authorities through the
Network.
e. Electronic Permit (ePermit)
This paperless, web-based permit application
system enables importers, exporters and forwarding
agents to apply for import/export permits from
Permit Issuing Agencies ( PIAs). Today, ePermit has
gone live at 17 permit-issuing agencies and currently
has registered RM 12 billion worth of combined
annual trade buying volume flowing through its
gateway. About 284,655 permits were transacted in
2009 with each electronic cycle taking about less
than a day and the number of ePermit users has hit
10,714 users. ePermit is one of the cornerstones in
the development of a true SW for electronic trade
facilitation in Malaysia.
Addressing Challenges Faced In Setting Up The
NSW
up the Trade Facilitation Action Council to
prepare the NSW’s strategic directions, goals,
vision and mission.
•Royal Malaysian Customs as the major
implementing agency responsible for clearance
of import/ export and transit related goods.
•Dagang Net Technologies as the designer,
developer and operator of the NSW.
Having realised that there are substantial
benefits to be gained from the implementation of
the NSW, Malaysia has remained focused on:
Critical Success Factors for Malaysia’s NSW
•Active involvement of all stakeholders from
conceptualisation
till
development
and
implementation stage.
•Regular training sessions to raise awareness of
the NSW concept.
•Detailed plans to ensure that project
priorities and goals were adequately set and
implemented.
•Clear implementation guidelines, including
mutual agreements on its standards and
technology.
1. Government as the Champion of the NSW
The success of Malaysia’s NSW has been
significantly influenced by the support of the
Malaysian Government who had championed this
move since the late 1990s when electronic trade/
infrastructure was identified as one of the nation’s
top priorities.
2. Strong Inter-Agency Collaboration
The active involvement and continuous interagency collaboration demonstrated by the 30
participating permit-issuing agencies have led to
the full implementation of ePermit today.
The NSW project was positioned as a nationallyconcerted effort and not as a mere application of
technology. The challenge was worth the effort as
the potential benefits were high - the NSW has the
capability to strengthen Malaysia’s capacity to fully
mainstream trade into its development strategies.
More significantly, it can allow Malaysia to reshape
its economy to compete in today’s global markets.
3. Public-Private Partnership
Whilst the Government took a leading role in
developing and implementing forward-looking
and sustainable e-initiatives, the private sector was
given the important role to devise and implement
the paperless move to achieve a more transparent
and efficient public delivery system for enhancing
productivity and reducing the cost of doing
business.
Today the key drivers of Malaysia’s NSW are:
•Ministry of Finance as the lead agency and the
initiator of the NSW.
•Ministry of International Trade and Industry
(MITI) as the oversight agency tasked to set
Figure 3: National Single Window Services
Improve and Complement existing E-Commerce services
ASW Gateway Hosting
eDeclare
ePayment
ePermit
eManifest
ePCO
Re-usability of Data
Single Sign-on
Now
on-line status tracking
NSW-ASW Integration
Before
On-Line Status Tracking
eDeclare
ePayment
ePermit
eManifest
5
The Emergence of the National Trade Facilitation
Portal To Drive Malaysia’s NSW
The Need To Integrate Malaysia’s NSW Into ASEAN
SW
By 2009, Malaysia’s NSW went ‘live’ to provide
a ‘single entry point’ that allows trade-related
information and documents to be submitted only
once by exporters, importers, freight forwarders,
shipping agents and other players in the international
trade chain.
Malaysia operates in an increasingly competitive
regional and global trading environment. As a
relatively small economy, Malaysia’s success in
achieving its growth targets is also determined by
how well it competes in the global market.
Figure 4: NSW Process Flow 4
MALAYSIA NSW ENVIRONMENT
Bank
Trade Community
OGAs
Customs
Port operator
ePermit
Shipping Agent
eDeclaration
Web Browser
Forwarding
Agent
eManifest
ePayment
ePCO
Importer
Exporter
Non-Web
System*
Users Outside
Malaysia NSW
Environment
MyTradeLink
Others
*currently not available
Currently, there are five core services being offered
by the NSW (Figure 4); about 17,778 registered users
use the five core services offered by the NSW5.
Table 1: NSW - Charges 6
Type of Charges
EDI-volume- based charges
6
5
6
RM1.20/kb
Current Charges
First Two years
Subsequent years
RM0.88/kb
RM0.80/kb
Document-based charges
RM10.00 for each approved
document
RM5.00 for each approved document
User registration
RM1,400.00 for all users
RM500 for corporate customers and RM200
for *Small Medium Enterprise (SME). This is a
one time charge only
Mailbox charges
4
Previous Charges
RM180.00 per month per
mailbox
Source - Ministry of Finance website NSW
Source MITI Weekly Bulletin - Vol 92 May 5, 2010 ( ISSN : 2180-0448 )
Source - Ministry of Finance website NSW
RM160.00 per month for corporate customers
and RM90.00 per month for SMEs
Subsequent mailbox at RM90.00 per month
for corporate customers and SMEs
Figure 5: Benefits and Values of NSW to the Trade Community
BENEFITS
VALUE-ADDED
REDUCED PAPERWORK
SINGLE SIGN-ON
DATA ACCURACY AND ERROR
REDUCTION
DATA REUSABILITY
FASTER SUBMISSION OF
DECLARATIONS
INTEROPERABILITY
TRANSPARENT APPROVAL
PROCESS
STANDARDISATION
Over 25% of Malaysia’s trade is within the
region and ASEAN is a key market for its exports.7
ASEAN’s global trade reached US$1.69 trillion in
2008. Enabling trade electronically with these subregional countries has huge relevance for boosting
Malaysia’s trade.
Since 1998, Malaysia has been actively involved
in regional, bilateral and multilateral discussions on
issues and projects pertaining to trade facilitation.
Malaysia has participated in the ASEAN SW
Steering Committee and chaired the ASEAN SW
Technical Working Group for the implementation of
the ASEAN Single Window (ASW).
In 2009, MITI conducted a bilateral ASW pilot
project between Malaysia and two countries
- Thailand and the Philippines. This ASW pilot
project was an effort to comply with 2010 ASW
requirements.
Upon its successful outcomes,
Malaysia is currently gearing up preparations for
connection to the ASW initiative.
Malaysia Gearing Up For Data Harmonization
Project
The development of the ASW’s pilot initiative
requires a high level of interoperability and
interconnectivity. This calls for the establishment
of a regional data set called the ASEAN Data
Model, prior to the implementation of the ASW.
Malaysia is currently conducting its Malaysia
Data Harmonization Project actively, which is
a requirement to ensure that Malaysia’s data
requirements will fit into the ASEAN Data Model, to
allow seamless integration of Malaysia’s NSW into
the ASW.
Moving Forward
The next phase of the NSW will see the adoption
of latest international tools to further increase the
efficiency of regional trade and to make the NSW
more interoperable, paperless and firmly aligned
with international standards. The NSW will be a
concerted effort to firmly place trade facilitation at
the heart of Malaysia’s trade and border strategy.
The Government has adopted a ‘whole of
government’ approach to streamline and strengthen
public service delivery:
7
Minister of International Trade & Industry - May 8, 2009
a. Government Transformation Programme (GTP) –
1 Malaysia Citizen-Centered Culture
Launched in 2009, the GTP is aimed at
providing government services that are accessible,
convenient and seamless as much as possible via a
SW approach.
b. 10th Malaysia Plan (2011-2015)
The 10th Malaysia Plan (10MP) promotes greater
public-private partnerships and more effective
policies to further improve the ease of doing
business in the country. The 10MP has set a target
for Malaysia to be ranked as amongst the top
ten countries in the World Bank’s Ease of Doing
Business by 2015.
c. National Key Economic Areas (NKEAs)
The ICT industry is one of the 12 NKEAs identified
as key sector to boost productivity and raise the
nation’s overall competitiveness.
d. New Economic Model (NEM )
The NEM has positioned the private sector as the
engine of growth to drive national development and
to fortify strategic partnerships with public sector
to enhance the nation’s global competitiveness.
e. PEMUDAH (A Special Taskforce To Facilitate
Business )
A high-powered taskforce was introduced in
2007 as a concerted cross-ministerial initiative
aimed at improving the business environment by
enhancing delivery of public services.
f. Key Performance Indicators ( KPIs )
A series of KPIs was introduced to measure the
delivery quality of government services including
the SMK-Dagang*Net’s service availability and
performance which is being monitored by MITI since
2008 to ensure that Dagang Net offers optimal
service delivery.
Malaysia’s NSW - A Journey That Never Ends
The NSW is now entrusted to bring about more
improvements that are needed for Malaysia to
remain competitive in the world and to achieve
its Vision 2020 as a developed nation. And the
Malaysian NSW for trade facilitation will be one of
the key important means to this end.
7
This Brief was prepared by the office of Ms. Zulina
Mohammed Salleh, Acting Chief Executive Officer,
Dagang Net Technologies Sdn. Bhd., Malaysia. For
questions and comments on the specific details of the
case, readers may write to [email protected].
The Brief was peer-reviewed and published by the
Trade Facilitation Section of UNESCAP on behalf of
UNNExT.
We welcome your feedback as well as expressions of
interest in our work on trade facilitation. For further
information, please write to Director, Trade and
Investment Division, ESCAP
E-mail: [email protected]
Website: http://www.unescap.org/unnext
The United Nations Network of Experts for Paperless Trade in Asia Pacific
(UNNExT) provides a networking and knowledge-sharing platform for policy
makers, practitioners and technical experts to bridge the implementation gaps
between the countries with different level of trade facilitation. Its mission is to
establish an ongoing community of knowledge and practice to facilitate the
implementation of single window and paperless trade in the Asia-Pacific
region. The UNNExT intends to enhance capacity of its members to make
informed decisions about policy issues at stake and to implement related
international instruments and standards. It is operated jointly by the United
Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
and the United Nations Economic Commission for Europe (UNECE).
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